Market Update for August 25th
Here’s a brief overview of the current economic scene as of Monday, August 25th:
The US Dollar (USD) managed to maintain its position at the start of the week. However, it seems quite challenging for it to gather any traction for recovery after the significant selloff during Friday’s trading session. Looking ahead, we have the National Activity Index and new home sales statistics for July due to be released from Chicago. Furthermore, the Federal Reserve Bank of Dallas is set to unveil its Texas manufacturing survey for August.
During a speech titled “Economic Outlook and Framework Review” at the Jackson Hole Economic Symposium on Friday, Federal Reserve Chairman Jerome Powell indicated that the Fed would be shifting to a flexible inflation targeting approach, abandoning the previous “make” strategy regarding inflation. He acknowledged increasing downside risks in the labor market but mentioned that the inflationary impact of tariffs is likely to be temporary. Consequently, these remarks led to a selloff of the USD as the weekend approached, with the USD index dropping by nearly 1% on that day, which erased any weekly gains. Meanwhile, major Wall Street indexes rose by more than 1% on Friday. As for US stock index futures, they were observed declining by about 0.1% to 0.2%.
EUR/USD increased significantly on Friday, edging past previous weekly levels. The pair is expected to remain in a consolidation phase above 1.1700 on Monday morning in Europe. Market watchers are particularly attentive to the current assessments and business environment data from IFO-Germany.
GBP/USD saw an increase of over 0.8% on Friday, breaking a four-day losing streak. The pair is currently floating quietly above 1.3500 during European sessions.
USD/JPY experienced a decline of about 1% on Friday. Transactions are now being fixed above 147.00. New data from Japan indicated that its main economic index for June fell to 105.6, down from 106.1 in May.
After spending much of the week below $3,350, gold gained bullish momentum on Friday, reaching two-week highs above $3,370. The XAU/USD is fluctuating within tight channels early on Monday, remaining comfortably above $3,360.
